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Andy Grove Talks About His New Learning Curve (Extended)

April 12, 1998

News: Analysis & Commentary: INTERVIEW

ANDY GROVE TALKS ABOUT HIS NEW LEARNING CURVE (extended)

The Intel founder goes from the daily grind to the big picture

Andrew S. Grove has made his mark as a manager, but now he's turning himself back into a student. The chairman and chief executive of Intel Corp. announced on Mar. 26 that he will hand over the CEO job to Intel President Craig R. Barrett in May. The change, Grove hopes, will let him spend more time studying the computer industry--and helping to guide the evolution of technology and public policy. For Intel, freeing Grove to drink up technology trends could help it avoid missteps like its slow response to the rise of sub-$1,000 PCs. On Mar. 31, Business Week correspondent Andy Reinhardt talked to Grove about how the executive plans to spend his future.

Note: This is an extended, online-only version of the interview that appears in the April 13, 1998, issue of Business Week.Q: Why step down as CEO now?

A: I've been CEO for 11 years, and there is a repetition and sameness to the rhythm of the job. Just think how many operations reviews, financial reviews, routine meetings, demand forecasts, etc. I have sat through. I think I've done this job enough. I was ready to change my routine. I'll have more leeway in my schedule.Q: Was the board disappointed by your decision to step down?

A: I'm entitled to do what I want to, and they respect my decision. You have to put it in context: We've been working through this process since 1989. Craig [Barrett] has had almost a decade of career milestones to get here.Q: What will you do with your extra time?

A: Change is going to come gradually. It's a rearranging of priorities: I can meet somebody that otherwise I might not have had time to, or I can go look at somebody's work that otherwise I wouldn't have. I don't know exactly what I'm going to do--I just know that I'm craving that kind of flexibility.Q: What topics are you especially interested in these days?

A: The future of networked computing, especially in businesses that haven't used it, and what we can do to remove obstacles to using it. Understanding the potential of various technologies, and the deployment of those technologies en masse. That's the menu. I can talk casually about any of those subjects, but my understanding is not that deep. I'm painting a canvas with my eyes closed.Q: What else do you plan to explore?

A: I believe as fervently as ever in connected computers. Commerce, marketing, information, entertainment--all of these things are going to be impacted by the presence of a billion connected computers. What needs to be done to reach that point sooner rather than later? Bandwidth has to be generated and dispersed to individuals and small companies. I want to understand this better.

I also want to have a better appreciation for what type of applications will be deployed as this connected PC world gets rolled out. The only way I can ever find out about those is by hanging around with people inside and outside the company who are into application development and who have very strong views. This has been a preoccupation of mine for some time, but there's room for improvement.

A third area has to do with small business, in particular. Information technology has historically been developed by large companies for use in large companies. To reach the scale we're talking about, and to make [E-commerce] more than just EDI with Internet standards, the universe of small businesses have to be equipped with computers, networks, services, and support--given that most of them don't have the IT infrastructures that large companies have. So, how will that happen? This is not a new undertaking for us, but I don't think I personally understand the deployment dynamics that are pertinent here as well as I'd like to. So, that's another one.Q: Can you think of an example when Intel would have benefitted from better trend-spotting?

A: I'll give you two examples. One pretty successful one was our strategy to supply fast Ethernet [networking cards] at low prices. Now, bandwidth is very widely available in larger companies. We had a great deal to do with that. I chalk that up as a success. Conversely, we were an early player in cable modems, which had the potential to deliver bandwidth to consumers. We were one of the first ones to demonstrate working cable modems five years ago, but I don't think we understood the task in its entirety. I would like to understand what it takes to do these things a little better.Q: Are you also putting more emphasis on cultivating software developers?

A: Absolutely. We've done a very good job with game developers, historically. We put technology, muscle, sometimes money, into funding advanced games. I'd now like to see that type of activity replicated in different fields, especially in applications pertinent to small and medium-size businesses.Q: Will you get more involved in policy?

A: Yes. These changes [from connected PCs], as they permeate society in the U.S. and abroad, will be so significant that they're going to be an increasing focus of regulations and governmental actions. I think we as an industry have a responsibility to guide that, and I suspect I'm going to have to spend a lot more time on that. Q: Your first-quarter earnings warning suggests changes ahead. Will Intel still get most of its revenues from PC microprocessors in five years?

A: Yes. There's an enormous temptation to take the events of a quarter and extrapolate them. But it's wrong when a couple of bumps in the road lead you to question the essentials.

Everything I said before is based on the fundamental concept of a future of a billion interconnected computers. We are a building-block company, and we make the blocks to build the client ends of that universe and the server end--and increasingly, we build the networking end. [Given] that vision of a billion interconnected computers, our business is going to be shaped by the needs and opportunities of providing the building blocks for the two ends and the middle. It's a little broader than characterizing us as a PC microprocessor company, particularly because when you say PC, most people think of the desktop computer.

I think the development of low-end computers is going to be an important element of the market, but it's just one element. There will also be performance PCs and mobile PCs, and servers will be the underpinnings of all of them.Q: Was your decision to step down in any way related to your health? [Grove fought off prostate cancer two years ago.]

A: Not at all. I've already said I have a clean bill of health.Q: Well, I'm happy to hear that.